The development of Pennsylvania’s portion of the Marcellus Shale has the potential to create an additional 212,000 new jobs over the next 10 years on top of the thousands already being generated all across the Commonwealth, according to a study released by the the Marcellus Shale Coalition, an advocacy organization.

Recent hearings by the House Finance Committee found that most of the high-paying, high skill jobs created by the Marcellus Shale drilling are being held by individuals coming into Pennsylvania from outside the state and not by Commonwealth residents.

The study says just the next 18 months, these activities are slated to create more than $1.8 billion in state and local tax revenues.

These are among the key findings released this week by professors from Penn State University in an update to their initial jobs and economic impact study issued last July.

"At a time when more than half-a-million people in Pennsylvania are currently out of work, the release of this updated report from Penn State today confirms the critical role that responsible energy development in the Commonwealth can play in substantially, perhaps even permanently, reversing that trend,” said Kathryn Klaber, president and executive director of the Marcellus Shale Coalition. “Last year alone, Marcellus producers paid more than $1.7 billion to landowners across the state, and spent more than $4.5 billion total to make these resources available. By the end of this year, that number is expected to double, and millions of Pennsylvanians will find themselves the direct beneficiaries of that growth.”

According to the Penn State study, the continued ramp-up of exploration activities throughout the Commonwealth over the next decade is expected to bring online an additional 13.5 billion cubic feet of natural gas a day, nearly seven times the amount that Pennsylvanians currently use on a daily basis.

This increase in daily natural gas output will likely result in the creation of more than 211,000 new jobs in the Commonwealth, according to the study, along with $18.85 billion in value added resources for the state’s economy.

As significant, the study also finds that for every $1 invested in the state by Marcellus Shale producers, $1.90 of total economic output is generated as a result – a phenomenon that’s come to be known as the “Marcellus Multiplier” among the hundreds of individual industries up and down the Marcellus supply chain that continue to benefit from this work.

Specific to the Commonwealth, the updated study finds that efforts related to finding, producing and delivering Marcellus resources to residents of the Commonwealth will create more than 111,000 new jobs by 2011, a function of an increase in the number of wells developed from the roughly 1,400 in operation today to 2,200 expected over the next 18 months.

All told, by 2011, this work is expected to deliver nearly $1 billion in annual tax revenue to state and local governments, and contribute to a value-added total slated to exceed $10 billion.

Reaction

“Today’s report is another that was paid for by the Marcellus Shale Coalition, and the authors’ and Penn State’s disclaimer clearly indicates that they do not vouch for the report’s accuracy or utility,” said Jan Jarrett of PennFuture. “What’s more, this report is based on assumptions provided by the industry. It is simply a report told by one side only.

“Unfortunately, some of the information is just plain wrong. The report says that development costs in the Marcellus are higher than elsewhere, while the drilling companies are telling their shareholders that drilling costs are so low, they can make a good profit even when gas prices are low. The gas in the Marcellus Shale is more profitable because it is located close to market and half the cost of gas to consumers is the transportation cost. The gas here isn’t going anywhere, so it is pretty ludicrous to think they would leave Pennsylvania for a minor tax that is charged in nearly every other state with significant deposits,” said Jarrett.

“Of course, a true study would have looked at the experience in those other states,” continued Jarrett. “Severance taxes have had practically no impact on production in Wyoming or Montana. One study of different severance tax rates in the Intermountain West found no evidence that different tax rates led to more or less investment from state to state.

“The report also fails to account for costs imposed by drilling,” said Jarrett. “It does not take into account damages to roads and bridges; PennDOT Secretary Biehler said that drillers caused so much damage in Bradford and Tioga counties that roads needed to be closed because the drillers, who are responsible for repair, were unable to keep up with the damage. Pennsylvania Police Commissioner Pawlowski has reported more state policing costs as drugs, violence, and weapons arrests have increased due to the influx of out-of-state drilling crews. Local police are also having trouble with enforcing truck weight limits.

“The natural gas in the Marcellus Shale is a wonderful resource of the people of Pennsylvania, but we make the rules and the drillers must pay their fair share,” said Jarrett. “We need the jobs and economic development, as well as the cleaner gas to replace other foreign and dirtier fuels. But they cannot come at the cost of our environment and our local and state budgets.”